29 Nov 2025 UK extends sugar levy to milk-based drinks
The UK government has confirmed that milk-based beverages will now fall under the Soft Drinks Industry Levy, marking a significant expansion of its sugar tax policy.….
Until now, the levy targeted primarily carbonated soft drinks and other high-sugar beverages. Milk-based drinks had been exempt, largely due to their nutritional value.
However, policymakers argue that the excessive sugar levels in many flavoured and fortified milk products contribute to the same public health concerns as soft drinks.
Key change: The sugar threshold for taxation has been lowered from 5g to 4.5g per 100ml, meaning more products will now fall under the levy.
What the new rules mean for manufacturers
Producers of milk-based drinks will face the same tax thresholds as other sweetened beverages. The levy is split into two rates:
- Lower rate: Drinks with 4.5–8g of sugar per 100ml will be taxed at £1.94 per litre.
- Higher rate: Drinks with more than 8g of sugar per 100ml will be taxed at £2.59 per litre.
This means reformulation strategies, such as reducing sugar, introducing alternative sweeteners, or highlighting low-sugar variants, will become increasingly important for brands seeking to remain competitive.
Companies have until January 2028 to adjust recipes before the levy takes full effect.
Implications for consumers
For shoppers, the change could lead to higher retail prices on popular flavoured milk drinks, milkshakes, and ready-to-drink coffees. At the same time, the levy may encourage healthier product choices, with more low-sugar or reformulated options appearing on shelves.
Public health advocates see the move as a step toward reducing sugar consumption across all age groups, particularly children and teenagers who are frequent consumers of sweetened milk drinks.
The government estimates the extension could cut 17 million calories a day from the national diet.
Industry response and next steps
While some dairy stakeholders have expressed concern that the levy could undermine the category’s nutritional positioning, others view it as an opportunity to innovate.
Reformulation, clean-label strategies, and functional positioning are likely to dominate the next wave of product development.
The government’s stance signals a broader trend: nutritional benefits alone will not exempt products from scrutiny if sugar levels remain high.
The levy is projected to raise up to £100m annually from 2027, reinforcing its dual role as both a health measure and a fiscal tool.
Source: Sky News